Companies that want to stay competitive and relevant in the 21st century need to be able to implement multiple modes of leadership and decision-making to keep up with innovation, the market, and society. Researchers and thought leaders have been exploring alternatives to hierarchical leadership for decades, but digital transformation adds a new sense of urgency and importance to questions of organizational change.
Meanwhile, digital technologies are making alternative leadership models increasingly feasible for companies that couldn't imagine anything but command and control in the past due to their size, complexity, or environment. Digital technologies and innovation are driving and enabling new leadership models in many ways, including:
The rate of change in a digital business context demands quick decisions and less time between decision and action. Whether you're responding to customer feedback, getting a product to market, or updating your data security settings—your business can't afford to wait for critical decisions to move up and down the chain of command.
To generate and grow brand gravity, the people who know your customers best need to be able to make decisions based on that knowledge, regardless of their place in a hierarchy. As new technologies and use cases evolve exponentially, expertise won't just live at executive or management levels. Networked leadership allows a business to leverage learning and knowledge anywhere in the org chart.
With data to inform and support decisions, people can verify whether a decision is logical and test whether it's working themselves, instead of waiting for expert verification or those with authority to sign off. Digital tools are making remote work and distributed teams more common, and some teams may even include "machine coworkers." To get the most from this environment, people need the freedom and permission to work powerfully and efficiently with each other and their digital supports.
When the boundaries of companies start to interweave through platforms and partnerships, shared systems and communities can't be under the control of any one organization's leadership. Networks of companies may need to choose leadership structures that suit their unique purposes, allowing each partner in the platform to contribute fully on behalf of their organizations (as has been seen in standards groups like the Bluetooth consortium or open-source software development).
Digital and innovation go hand in hand, and most companies looking to level up their Digital Fluency also prioritize innovation as a critical capability. Just as digital systems grow more valuable when connected, innovation benefits from a mix of diverse stakeholders and perspectives.
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It takes a lot to imagine, prototype, test, and launch something new. Each person who is involved brings some form of leadership to the collective. Executive sponsors who bring resources and legitimacy to a project are the innovation leaders that first come to mind. Also required, however, are creative thinkers who feel empowered to share ideas that may challenge the status quo, "makers" who can iterate on a concept to respond to breakdowns and breakthroughs, and people who will champion a prototype and test it in the field with customers and partners.
Each of these roles requires the ability to make decisions in the moment and move confidently in areas that aren't fully defined yet.
Because innovation involves risk, it makes sense when businesses appoint a Chief Innovation Officer or equivalent role to oversee it. But for new ideas to thrive, this role should be more about connecting the dots and bringing a big picture perspective across projects rather than managing or directing operations.
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Innovation follows a cycle through four phases—formulation, manifestation, realization, and culmination—each requiring different types of leadership. Hierarchical businesses often move through these phases in a linear cycle out of necessity.
Networked organizations, however, aren't limited to a linear approach to innovation. When leadership and decision rights are spread throughout teams, these phases can occur in parallel, maximizing everyone's talents and expertise.
When new products are launched at full scale in the realization phase, some amount of hierarchy can be advantageous. Since consistency and momentum are critical in this phase, it's often better in this phase to have a few people who are in close agreement making decisions together.
For more detail on the innovation cycle and how to design teams and processes for each phase, check out Digital Factory, which examines roles and activities at each phase (or season) of innovation.
Formulation, Manifestation, Realization and Culmination (spring, summer, fall, and winter 'seasons' of innovation, respectively) each have implications for leadership and decision-making.
While organizations and teams who break away from hierarchy see many changes in how they work and what they can achieve, some of the clearest evidence is in the culture and communication between leaders and the teams they serve. Here are just a few of the differences people may experience when working in a networked organization.
Even the most senior leaders become not just comfortable with being asked to explain their decisions, but ready to share the thinking behind their choices proactively. Externalizing wisdom for the whole team's benefit is key to networked leadership.
Networked organizations aim to have decisions made by those who are closest to the situation. Expect to see people comfortable improvising in the moment and making choices that impact their customers or area of the organization, even when that's far removed from the executive layer.
When people in a networked organization need to make a hard choice, they know where to look for guidance. The company's purpose and the principles that put it into action will be easy for anyone to understand and implement. Critically, should the reaction be unexpected or something goes wrong, everyone involved will know where to share new learning to improve the principles for future situations.
Collaboration is a critical part of most activities, and input from a variety of teams, functions, and perspectives is considered a credibility boost for any decision or project. Communication tools and other internal systems make it easy to find people with specific knowledge from anywhere in the organization.
Asynchronous, cloud-based environments for document creation and ideation make it easy for more people to contribute no matter where they're located or how full their calendars are.
People know the difference between failure and a learning opportunity (a 'fall' you can get back up from), so they're confident experimenting and testing the limits because they know how much risk is too much.
Leaders also feel comfortable watching teams try new things because they trust that people know where the boundaries are. When things don't work out as planned, the lessons learned are celebrated as valuable progress toward the next attempt.
